Improving the operational efficiency of your warehouse can lead to big savings and even bigger profits. As your warehouse grows, it can be challenging to continually optimise your supply chain process so that you maintain and grow your warehouse’s profit margins. As a warehouse manager, you need to be proactive with managing processes that will enhance your warehouse management processes. Below are a few ways to successfully implement processes that will improve your warehouse’s operational efficiency.
Control the labour costs.
One of the most expensive areas in your warehouse management is the cost of labour. Depending on the market you are in, you may be facing increases in the minimum wage for your warehouse, which will impact the productivity cost. You want to implement systems that will maintain or reduce the productivity cost for your warehouse. One of the ways to achieve this is through incentive pay schemes for your employees. For example, among your picking and packing staff, you can engineer more productivity by measuring their performance level and paying a bonus for an exceptional target. Woolworths would offer this type of incentive in some of their warehouses where employees that performed at 140% of the warehouse’s productivity average would earn an extra $200 per week. Additionally, managing the work roster among your staff to ensure that you didn’t’ have too many people that were rostered on to work so that your labour costs sends your balance sheet into arrears.
Invest in equipment that will make working processes more efficient.
The more efficient your labour staff becomes with delivering the warehouse’s needs, the more profit the warehouse should earn over the long term. Investing in machinery such as new forklifts, pallet trucks and pallet wrapping machines are great ways to optimise the working efficiency in your warehouse.
Seek to improve tracking and measurement within your warehouse.
The better your warehouse tracks, measures and manages your warehouse’s supply chain, labour management and overall warehouse management, the better the warehouse will become with improving its operational efficiency. There are critical metrics that must be monitored and managed if the warehouse is to have a chance at achieving KPIs and becoming more efficient. Seek ways to get feedback from employees and suppliers and keep a lookout for any systems that can improve how your warehouse monitors intrinsic processes that affects profitability.
Empower frontline managers that will execute your strategy.
It is vital that the strategy that you put into play is filtered into your warehouse team that will execute it successfully. This means empowering your warehouse’s frontline managers to oversee and manage processes on the floor, order fulfilment, worker morale and costs. These managers can successfully execute your tactics and provide you with valuable feedback to further improve your warehouse strategy to allow you to hit your goals.
Investing in SAAS vs Licensed warehouse management systems.
Warehouse software is expensive. Ideally, each warehouse would like to develop a software that is customised to their warehouse’s needs. The cost of doing so may reach hundreds of thousands. It is likely that the ongoing management cost with developers to fix bugs and to make further amends to the software will add tens of thousands in unforeseen costs. The other downside is the software will need to be updated every few years, so there will be a recurring cost. Investing in a SAAS provider can greatly reduce the costs, however it will be an off-the-shelf solution meaning that there may be minimal customisations depending on what the provider can offer. The benefit is ongoing update costs will be managed by the service provider and it can save your business thousands of dollars over the long-term.
Effective warehouse management is critical to maintaining profits. Seek to stay on the front foot with managing staff, labour and processes to maintain good operational efficiency and warehouse profits.